Sustainability & Active Ownership

The Fund as an owner

By being a business-oriented and transparent owner, taking a long-term approach and with high integrity in its actions, the Fund builds trust in companies, other owners and stakeholders, and among the general public. Strong trust better enables us to influence companies in the right direction.

The aim of active ownership, or shareholder activism, is to increase returns and reduce financial risk in the long run. Första AP-fonden believes that well-managed companies have greater potential to generate profits and avoid risks. It is therefore important for the Fund to strive to influence companies in the desired direction. We want to make responsible use of the position afforded us through ownership so as to be a positive influence on the companies.

The ownership policy of Första AP-fonden lays the foundation for its work on ownership-related issues. It contains clear guidelines on the most common aspects of active ownership. As well as complying with the Fund’s ownership policy, its associated companies must also follow the the ownership directives of Första AP-fonden.

We have also produced a brochure that explains our expectations. It covers aspects such as human rights, corruption and corporate governance.

The aim of active ownership, or shareholder activism, is to increase returns and reduce financial risk in the long run.

In general, Swedish companies are easy to work with as they hold regular discussions with their major shareholders ahead of shareholders’ general meetings. Such meetings provide opportunities to influence the boards’ proposals and jointly arrive at compromises that satisfy both the shareholders and the boards. It is also easy to get access to board chairmen and members to discuss active ownership in the Swedish companies. Moreover, participation in nomination committees enables the Fund more easily to maintain contact with the company boards.

There is less opportunity to exert an influence in foreign companies. One reason for this is that the Fund’s holding, and therefore its voting power, is lower. Another is that it is more difficult to maintain regular dialogue with company boards. In many countries, few rights are given to shareholders in law.

Here (in Swedish), the fund reports on the work in Swedish nomination committees and an overview of how we voted at AGMs in Sweden and in foreign markets on various issues. To see how AP1 has voted in each individual issue, see here.

Our ownership policy

The ownership policy of Första AP-fonden consists of eight principles for corporate governance and the companies’ social and environmental responsibility:

  • Voting rights. The right to vote at general meetings must be unrestricted. Changes in voting rights must be voluntary.
  • Equal treatment. Shares granting equal financial rights should always be treated equally. Minority shareholders must be protected.
  • Capital structure. The capital structure should be appropriate considering future profit potential. Capital that is not used effectively should be distributed to the shareholders.
  • Company boards of directors. The shareholders should have the right to appoint the board of directors, and all shareholders should be entitled to propose and vote for board members. Board members should have the right expertise and a high level of integrity. The composition of the board should promote diversity. Remuneration should be reasonable and market-based, and should reflect the demands set on the board members.
  • Remuneration. Remuneration to senior executives should benefit the company and its owners. It should also be reasonable, market-based and openly justifiable to the company’s stakeholders.
  • Audit and internal control. The auditors are appointed by the shareholders. There are high demands on their independence from the company and its management.
  • The environment and social issues. Operations should be conducted in a financially, environmentally and socially responsible manner.
  • Information disclosure. The operations should seek an open dialogue with the shareholders, with information that is accurate, clear, objective and trustworthy.

Ownership strategies for different shareholdings

Första AP-fonden shall be an active, dedicated owner. Our point of departure is always what is best for the companies and their shareholders. This is what is most beneficial for the pensioners of today and tomorrow.

The strategies we use to influence companies vary depending on our percentage of ownership, the company’s domicile and the management form. Our primary tools are voting, appointing boards, dialogue, legal proceedings, influencing self-regulation and legislation, as well as exclusion of companies.

Approach for influencing companies

In companies where our shareholding is more than 10 per cent, i.e. in real estate and infrastructure companies, Första AP-fonden has a seat on the company board.

Taking part in nomination committees is a vital tool, as this enables us to influence the composition of the company’s board of directors. When it comes to Swedish and foreign companies, another important tool is voting at general meetings of shareholders. In Sweden we participate in person, and abroad we are aided by consultants who conduct analyses based on our rules and deal with the practicalities of voting. How we vote is published on our website. We also occasionally publish written comments on our standpoints; these can be found in the news section on our website.

Our point of departure is always what is best for the companies and their shareholders. This is what best favours the pensioners of today and tomorrow.

We also regularly select a number of issues where we write to the companies and explain why we voted a particular way. This is often about remuneration to senior executives.

Dialogue solves problems

Dialogue can help to rectify problems, which also lays the foundation for the value of the company to increase. If a company has problems, those problems don’t just disappear if we sell our equities.

Exclusion – the last resort

Although we prefer to exert a positive influence on companies rather than excluding them from our portfolio, we have decided to exclude investments in certain sectors. In addition, a number of companies have violated laws or international agreements that are backed by Sweden and we have chosen not to invest in these companies. A list of excluded companies can be found here.

Before we exclude a company, we always give it an opportunity to answer questions, and if it demonstrates that it is willing to make a change, it may still be considered for investment.


Anna Magnusson
Chief Active Ownership Officer